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SFHD -- Santa Fe Holding Co., Inc.
Com ($0.005)
Address:
7125 Crossroads Blvd.
Brentwood, TN 37027
USA Website: http://www.santafecattleco.com
Phone: 615-661-4500 Fax: 615-661-4520
Santa Fe Decor available at: http://santafedecorco.com/Home_Page.php
Gift card purchases: http://store.santafecattleco.com/Departments/Gift-Cards.aspx
Virttual tour: http://www.santafecattleco.com/tour.html
Investor Relations: http://www.santafecattleco.com/investor.html
Locations: http://www.santafecattleco.com/locations.html
Menu: http://www.santafecattleco.com/menu.html
COMPANY PROFILE
SUMMARY
Santa Fe Holding Company, Inc., the parent of Santa Fe Cattle Co. (the “Company”) is a chain of casual dining theme (“roadhouse”) restaurants located in Alabama, Georgia, Mississippi, Indiana, Tennessee, Kentucky, Oklahoma and Louisiana. In 2007, Santa Fe Holding Co., Inc. had approximately $33.95mm in revenue, an increase of more than 57% over 2006. The company expects to have 30 stores by year end 2008 and 42 by year end 2009.
BUSINESS MODEL
PRICING
The Santa Fe Cattle Co. was created to be a mid-priced causal steak restaurant chain. This particular niche in the steak restaurant business, with dinners priced in the $10 - $12 range, is not dominated by any one player. The two major players currently in this arena: Logan’s (which Mr. York helped develop) and Texas Roadhouse, have less than 600 restaurants nationwide. This sector of steak restaurants, which falls between Outback Steakhouse and Longhorn Steakhouse ($14 - $16 dinner) and Golden Coral and Ponderosa ($6 -$8), is underserved and provides tremendous growth potential. Steakhouse customers are price-sensitive; a $2 difference in entrees gives Santa Fe Cattle Co. access to a market that is different than the market being served by the lower and higher priced restaurants (as described above).
FOOD
Santa Fe Cattle Co. also sets itself apart from the competition by being the only causal steak restaurant that offers quality Texas Hill Country fare to compliment its full line of USDA choice steaks. This mix of Texas Hill Country has not only proven to be quite appealing to consumers but increases profit margins over traditional steak only menus.
The Santa Fe Cattle Co. concept is built around USDA choice steaks that are aged to our strict requirements, along with limited chicken and seafood items. Beef costs are approximately one-half of all food costs. In-house cutting and aging rather than purchasing pre-packaged and ready-to-use beef reduces the variable cost of beef by approximately 50%. Pre-packaged meats are aged approximately 14 days. We age our meat stocks two to three times this number of days, producing an optimal end-product at a meaningfully lower price. In economic terms, our utility curve is well off to the right, permitting us to deliver higher customer satisfaction levels as measured by what our customers get and how much they pay.
Santa Fe Cattle Co. restaurants offer a diverse and moderately priced lunch and dinner menu with our specialty being steaks, ribs and fajitas cooked over an open mesquite grill. The featured item is steak and there are 12 steak cuts ranging from 6 to 32 ounces. The all time favorite is the 6 ounce choice sirloin offered with your choice of 2 side items, fresh baked yeast rolls with cinnamon butter and all the peanuts you can eat. However close on its heals are the Lynchburg Steak marinated for 24 hours in real Jack Daniels Whiskey, “Fall off the Bone” Baby Back Ribs smothered in our homemade chipotle BBQ sauce and our famous Platter of Steak, which is ¾ pounds of aged sirloin, sliced, and served on a sizzling platter of sautéed mushrooms and onions. The menu also contains a section called “Chuck-Wagon Favorites” that are specialty items developed exclusively for Santa Fe Cattle Co. Our world famous (at least to us) dessert is the Caramel Apple Wrap. Stove-top apples rolled in a flour tortilla, deep fried then hand sprinkled with cinnamon and sugar then drizzled with caramel sauce and served with the best ice cream on the planet (at least it’s the richest) Blue Bell Ice Cream straight from Texas. The food at Santa Fe Cattle Co. is what keeps us excited and keeps customers coming back. All of our sauces and dressings are made form original recipes and all made in-house. “If you want Kraft go to the grocery store.” We offer a daily lunch express menu comprised of some of the great menus items you find for dinner. Steak and rolls, crispy catfish and enchiladas are just a sample of our very reasonably priced lunches. Most items are less than $7.
ATMOSPHERE
The food is presented in a casual, nostalgic family oriented atmosphere reminiscent of the old west. Each store has a signature “Big Ass Ceiling Fan” (yes that is the actual name of the company) that is used to cool cattle in feed lots. The fan encompasses the entire dining room and is quite the local attraction, especially for young children. The atmosphere is unpretentious, lively and very comfortable. Complimentary peanuts roam the tables and floors. Santa Fe Cattle Co. is designed to appeal to a broad range of customers including business people, couples, singles and especially families. To appeal to families, the restaurants offer a special kids menu with coloring kit and our 32-ounce steak club for the young and hungry at heart.
Each Santa Fe Cattle Co. restaurant has a full bar featuring our own designed specialty drinks like Texas Tea, Texas Margaritas and $.99 cent Margaritas. We also have “The coldest beer in town, Guaranteed!” And offer some pretty famous south of the border brands. You can get them by the bottle or order an ice bucket of beers to share (or not). The average ticket price at lunch is $8 and dinner is around $12. We won’t rustle your cash away from you at Santa Fe Cattle Co. The service is friendly and down home, the atmosphere extremely enjoyable and the food is simply awesome.
THE RESTAURANTS
The original restaurants average 8,00 square feet but our new model stores rolled out in 2007 are 6,000 square feet (much like Chili’s). We use lots of weathered wood and siding and covered tin roofs adorn the dining room over the booths. Liberal use of old brick, river stone, and cement floors round out the interior. The typical Santa Fe Cattle Co. is a free standing building in a high traffic area or interstate exit. Average annual per store sales are over $2,600,000. Average annual store level cash flow/EBITDAR exceeds 21%.
HISTORY
Santa Fe Cattle Co. was started in the mid 90’s by veteran restaurateur, Danny York, who was also partly responsible for the highly successful Logan’s Roadhouse chain that went public in 1995. Cracker Barrel eventually bought Logan’s Roadhouse for over $180 million in 1999, almost 2-times sales at the time. The Logan’s Roadhouse concept gave birth to chains like Texas Roadhouse and Roadhouse Grill. After the Logan’s IPO, York created and developed the Santa Fe Cattle Co. concept. After growing the concept to 16 units by 2000, York sold his equity interest in the concept and returned to other restaurant ventures in which he had ownership interest. The unexpected death of the buyer in 2001 led to the disruption in growth and eventually to the almost complete dissolution of the Santa Fe Cattle Co. chain. After a few years of serious mismanagement, the Estate approached York about regaining ownership of the Santa Fe Cattle Co. concept.
At that time, there were only six restaurants remaining open. They were averaging only $1.5 million in sales per year. Mr. York bought the remaining stores and rights to the name in March of 2003, and began to resurrect this concept. The previous management had altered the stores not only in looks but also in food offerings and quality. Steaks were no longer hand cut but bought pre-cut and frozen, carpet was put in all the stores, which doesn’t go well with peanut shells on the floors and building colors changed. Store management was run off and a merry go round of management was set in place. After 18 months of very hard work the concept was reborn and sales were averaging over $2.2 mm per store. All of the stores are back to the original concept.
OPERATIONS
Although 2005, 2006 and 2007 margins were low due to the remodel and remake of the concept, the EBITDA margins should normalize at 5-7% annualized and possibly exceed 7% as the Company exits 2008. The company uses a tried and true formula called a “Weekly Sheet” to track weekly store cost. This allows the store management and company management to react to any fluctuating costs weekly, instead of waiting for a P&L at the end of the month. This weekly sheet is produced by the General Manager of each store and is gone over with all managers in a Monday afternoon weekly sheet meeting with upper management. A P&L statement is produced every four weeks and is given to each store management team. P&L’s are shared between stores so nothing is hidden or off limits to all managers. It creates a competitive managerial environment sense of unity between all the team members. Every store management team is on a four-week bonus plan according to how they grow sales and control cost. The General Manager that shows the most improvement at the end of the year is rewarded with a very generous bonus.
CORPORATE GROWTH PLAN
The growth plans for Santa Fe Cattle Co. are pretty simple. The Company will grow its base around the states the Company currently operates in: Alabama, Indiana, Oklahoma, Georgia, Mississippi, Tennessee and Kentucky. The concept does very well in small and medium-size towns with average populations of 20,000 to 100,000 people. This particular market niche served by Santa Fe has only two real players: Texas Roadhouse and Logan’s Roadhouse. Therefore market penetration is very low and growth potential is enormous. Neither of the two above mentioned concepts have smaller prototypes and no plans to build any. Therefore, Santa Fe Cattle Co. is poised to enter markets with virtually no competition in this segment except for any “Mom and Pop” operations. The Company currently operates in several small markets and the returns are exceptional.
RESTAURANT MANAGEMENT
The management team at each restaurant is composed of a very well paid general manager, kitchen manager and two floor managers. In stores that do more than $3 million/year in sales there is an additional salaried floor manager. A trusted and key hourly person that is interested in entering the management ranks is also used to open or close the store 2-3 nights per week. There are area supervisors for every four stores and they report to a Regional V.P. of Operations. Santa Fe Cattle Co. has recently added a Human Resource Director and also a Director of Menu Development/Training (see attached organization chart). All of these individuals were with Mr. York during the early stages of the development of the Santa Fe concept. Many of the current kitchen and general managers are former Logan’s Roadhouse employees and know this concept inside and out. The management team of this concept is dedicated and as knowledgeable as any in the industry. They receive modest salaries and very generous bonuses based on performance.
COMPETITION
As mentioned above, Logan’s Roadhouse and Texas Roadhouse are the two main competitors to Santa Fe Cattle Co.
Logan's Roadhouse®, Inc., was formerly owned by CBRL Group and was sold in 2007 for $480 million.
Texas Roadhouse, Inc. (Nasdaq: TXRH) together with its subsidiaries, operates a full-service, casual dining restaurant chain in the United States. As of December 26, 2006, the company operated 251 Texas Roadhouse restaurants comprising 163 owned and operated restaurants and 88 franchised and licensed restaurants. Texas Roadhouse was founded in 1993 and is based in Louisville, Kentucky.
For the four quarters ending September 25th, 2007, Texas Roadhouse had revenues of approximately $701mm with a net income of approximately $39.95mm.
KEY DIFFERENTIATORS
Officers:
Danny York, Chairman; Josh Weis, Dir.; Kahne Vaughan, Secretary
Outstanding Shares: 26,171,286 as of 2007-06-29
Estimated Market Cap: 36.378M as of 2007-07-11 (based on Outstanding Shares as of 2007-06-29)
New stores to open, this and next year
| New Locations Coming Soon: | |||||||
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Multi-Billion Dollar Private Equity Fund Makes Additional Investment in Santa Fe Holding Company
Friday February 13, 9:30 am ET
BRENTWOOD, TN--(MARKET WIRE)--Feb 13, 2009 -- Santa Fe Holding Company (Other OTC:SFHD.PK - News), the parent company of Santa Fe Cattle Co., announced today that two private equity funds with assets totaling more than $5 billion under management have purchased $3 million of convertible debenture securities and warrants from the company. Santa Fe Holding Co. is a restaurant holding company which currently owns and operates 30 Santa Fe Cattle Co. restaurants located throughout 7 states.
Midtown Partners & Co. has been engaged by the company to assist in many different areas of strategic financing for the company. "We continue to raise capital to facilitate expansion at a faster pace," states Danny York, Chairman, "But it has been important to us that any capital raised is done on a friendly basis and fair to the company and our shareholders." Midtown has done an excellent job for us in finding strategic partners who understand our true potential and are interested in investing with us for the long term. Mr. York added, "The two funds that have recently taken positions in the company did so in a convertible security which can be converted to restricted common stock at any time. This is the same type of investment these funds have made with Santa Fe in the past and have converted their past positions into equity. These investment groups have continued to show a commitment to the long term success in Santa Fe. Their continued support gives us the time and resources to execute our growth strategy and build shareholder value."
"The additional capital will give us the ability to lock up additional locations for 2009 and the flexibility to add additional locations in 2009 if the right opportunity presents itself," says Mr. York. The company has opened two new locations in January and expects to open 4 additional company stores and 4 franchise units. Mr. York went on to say, "We will always be open to additional equity investments in our company as long as the capital is committed to staying with us long term and the terms of the investment is not only fair to our current shareholders but adds value to the overall enterprise."
Investors can learn more about the company, the food, and store locations on our website: www.santafecattle.com.
Santa Fe Cattle Co. Signs New National Beef Agreement Trimming More Than 6% From Total Beef Cost
Thursday March 12, 11:52 am ET
NASHVILLE, TN--(MARKET WIRE)--Mar 12, 2009 -- The popular and rapidly growing Santa Fe Cattle Co. (Other OTC:SFHD.PK - News) roadhouse style steak restaurant chain has reached an agreement on a fixed beef contract price for March through December 2009 with National Beef, the company's current supplier. The agreed to terms will lock in beef prices for the rest of 2009 and reduce total beef cost by more than 6% from 2008.
"First orders on our new agreement will be placed this week," according to Danny York, Santa Fe's CEO. "Several members of our management team were instrumental in negotiating these tremendous savings, Mr. York went on to say how proud he is of his management group's willingness to always find ways to lower cost and continually improve the quality and service for the customers of Santa Fe."
Flourishing in spite of the troubled economy, the company's strong sales and revenue growth have established Santa Fe Holding Company as one of the fastest growing concepts in the restaurant industry. In 2008, revenue grew by over 57%. The company is projecting revenue growth of over 50% and expects to add 8 to 10 new stores in 2009.
Santa Fe Holding Company Revenue up Over 60% in 2008
Tuesday February 3, 9:30 am ET
This Is the 5th Consecutive Year of Double Digit Growth Surpassing the 57% Increase in Revenue for 2007
BRENTWOOD, TN--(MARKET WIRE)--Feb 3, 2009 -- Santa Fe Holding Co., Inc. (Other OTC:SFHD.PK - News), the parent company of Santa Fe Cattle Co., announced today that preliminary total sales for fiscal year 2008 which ended December 30, 2008 was up over 60% from the previous year. Santa Fe Holding Co. is a restaurant holding company which currently owns and operates 30 Santa Fe Cattle Co. restaurants located throughout 7 states.
Year end revenue for 2008 totaled $53,334,260 compared to last year's $33.9 million up over 60% from the previous year. This was the fifth year in a row of record sales growth for Santa Fe. "While it will be a few weeks before our final numbers are tallied, we are very excited about our company's continued strong, consistent growth," announced Danny York, Chairman of the company. Mr. York went on to state, "EBITDAR should be over $8.9 million dollars, an increase of 91% from the previous year when our final numbers come in." Santa Fe Cattle Co. opened a record 9 new stores in 2008. Mr. York went on to say, "We expect 2009 to be another banner year for us as we plan to open 10 new stores and expect revenue to again increase by over 60%. We recently opened two new restaurants last week and have 3 stores under construction and will open our 31st store next month in Glenpool, OK." Mr. York also noted that the seven additional locations slated for 2009 are all under contract and will start construction in the next 90-180 days.
Santa Fe will be providing a letter from the Chairman to all investors in the next few weeks to review all of the positive developments within the company and review the company's strategies for 2009.Investors can learn more about the company, the food, store locations, and future restaurant sites on our website: www.santafecattle.com.
